U.S. cosmetics group Revlon has filed for bankruptcy protection after struggling with supply chain issues and failing to compete with newcomers backed by celebrities and social media connoisseurs.
The 90-year-old group, majority owned by billionaire Ron Perelman, on Thursday sought protection from Chapter 11 bankruptcy, which allows the company to continue trading while drawing up a plan to pay creditors.
The company, which also owns brands such as Elizabeth Arden, Almay and Cutex, along with fragrances led by Christina Aguilera and Britney Spears, has a liability of between $ 1 billion and $ 10 billion, according to the bankruptcy court in the southern district of New. York.
Revlon’s collapse in finances follows a slump in the beauty industry during the pandemic peak, followed by a shortage of ingredients and sharp cost increases this year.
But the company has also faced long-term pressure from brands like Rihanna’s Fenty Beauty and Kylie Cosmetics, backed by Kylie Jenner.
Traditional beauty brands have also struggled to fight online start-ups like Glossier, although more recently the start-up brand has faltered, firing a third of its corporate employees this year.
“Revlon has gradually lost its U.S. market share since 2018, but the pandemic hit the company once again in addition to existing financial challenges,” Lia Neophytou, a senior consumer analyst at GlobalData, said before the presentation.
“In addition, its massive market and its affordable Revlon beauty brand have faced competition from the trendiest brands using TikTok, a key source of inspiration for beauty and hairdressing shopping. attracting a younger consumer base “.
The company expects to receive $ 575 million in borrower financing in the possession of its existing lenders to support day-to-day operations, Revlon said in a statement.
He said he was struggling with “liquidity constraints caused by continued global challenges, including disruption in the supply chain and rising inflation.”
The company had $ 3.3 billion in long-term debt at the end of March, while reports of impending bankruptcy last week caused a sharp drop in the price of its shares. The presentation includes overseas units in Canada and the United Kingdom.
Executive Director Debra Perelman, Ron’s daughter, said: “Consumer demand for our products remains strong: people love our brands and we continue to have a healthy market position.
“But our difficult capital structure has limited our ability to navigate macroeconomic issues to meet this demand. By addressing these complex limitations of inherited debt, we hope to be able to simplify our capital structure and significantly reduce our debt. which will allow us to unlock the full potential of our globally recognized brands. “
Revlon narrowly avoided bankruptcy in 2021 after a clash between its owners and lender Carl Icahn.